Core banking startup Nymbus is “attempting to extort $1.5 million from” TransPecos Banks, SSB, the Texas bank claims in an ongoing contract dispute:
Nymbus, which, according to Crunchbase, has raised nearly $200 million from VCs like Insight Partners, banks, and credit unions, including $20 million from VyStar Credit Union -- which, last week, entered into a consent order with the CFPB over a "botched" transition to a "dysfunctional" new online banking platform.
While the CFPB order didn't specify the name of the platform, reporting at the time of VyStar's outage that led to the order and other details contained in the action make clear the platform in question is Nymbus.
But now, filings indicate Nymbus has faced legal challenges from others stemming from its claims about the quality, completeness, and reliability of its software offerings.
In fact, a group of banks from which Nymbus acquired some of its foundational infrastructure attempted to rescind the sale of a technology provider subsidiary, Sharp BancSystems, alleging that Nymbus had breached the sale agreement by failing to transition Sharp's bank customers to the new Nymbus platform by the agreed upon deadline -- because “the new, state-of-the-art software platform promised by Nymbus” didn’t actually exist.
CHROME Federal Credit Union alleged in a 2018 lawsuit that Nymbus' "SmartCore did not exist as functional software in May 2016, did not exist at the time Chrome and Nymbus executed the Master Agreement in October 2016, and still did not exist as functional software in May 2018, which is when Chrome provided Nymbus notice that Nymbus had committed an event of default under the Master Agreement."
Florida-based Surety Bank sought a court declaration that it was terminating its agreement with Nymbus for cause, as the company had "repeated problems with providing the core service," including basic functionality like ACH origination, asset/liability management, and account/general ledger reconciliation.
And TransPecos Banks, SSB makes the shocking allegation that Nymbus is "attempting to extort $1,500,000 from" it, with the core provider going so far as to threaten to contact the bank’s regulators?“to ask the regulators’ advice for the best path to wind down [TransPecos]’s services with minimal risk to the banking system, as [TransPecos] is no longer a paying customer.”
Full details in this week's Fintech Business Weekly -- you know where to find it.
